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Federal Court of Appeal upholds but limits scope of leading decision on metatags

In the recent decision of Red Label Vacations Inc v 411 Travel Buys Limited 2015 FCA 290, the Federal Court of Appeal appears to have made a distinct effort to limit the scope of the trial judge’s ruling that copying of metatags, including third party trademarks, did not constitute copyright or trademark infringement. This decision leaves open the possibility of a different result in appropriate future cases.

Background

In our March 9, 2015 IP Update, we reported the Federal Court decision, which contained one of the first detailed considerations by a Canadian Court of the issues of copyright and trademark infringement via the use of metatags.

With respect to copyright, the trial judge held that copyright did not subsist in the Plaintiff’s metatags because they were simple key words and did not contain sufficient skill and judgment. Therefore, there was no copyright infringement by the Defendant. The trial judge expressly left open the possibility that copyright could subsist in metatags in different circumstances. The trial judge also found no infringement on an alternative basis.

With respect to trademarks, the trial judge found that the Defendant’s use of the Plaintiff’s trademarks in metatags did not entice consumers to visit the Defendant’s website and did not give rise to confusion. Therefore, there was no trademark infringement. The trial judge made similar findings on the issues of passing off and depreciation of goodwill. The trial judge also made certain broad statements that appeared to hold that a metatag could never, by itself, constitute a basis for trademark confusion. These findings were the first of their kind in Canadian law and arguably result in a more narrow scope of trademark protection than the law that has developed in the United States and Europe.

Court of Appeal decision

The Court of Appeal found that the trial judge set out the correct legal test for each issue and that the Appellant was unable to show any clear errors in the trial judge’s findings of fact. On this basis, the decision of the trial judge was upheld.

Importantly, the Court of Appeal also made comments which appear intended to limit the scope of the trial judge’s decision to the facts of the case. For example, the Court of Appeal stated that “in some situations, inserting a registered trademark (or a trademark that is confusing with a registered trademark) in a metatag may constitute advertising of services that would give rise to a claim for infringement”. This finding leaves open the possibility of trademark infringement through use of metatags in future cases.

In an unusual step, the Court of Appeal also issued concurrent reasons, which upheld the trial judge’s decision based on narrow grounds without endorsing the remainder of the trial judge’s findings. In particular, the concurrent reasons ended with the following paragraph:

“To conclude, the decision of the Federal Court must be read in light of the facts before the Court. The extent to which a trademark may be used in metatags without infringing the trademark is, of necessity, fact specific. These reasons ought not to be read as endorsing the Judge’s remarks relating to “initial interest confusion” or as endorsing every alternate basis on which the Judge dismissed the action”.

Conclusion

The decision indicates that under Canadian law, the use of third party trademarks as metatags may constitute trademark infringement, and the copying of third party metatags may constitute copyright infringement, in appropriate cases. It remains for future cases to clarify what factual circumstances would be required to establish such infringement.

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